Wagner Seed Co. v. Daggett

• Decision Date: 10 September 1986
• Docket Number: D,No. 1164,1164
• Citation: 800 F.2d 310
• Parties: , 87 A.L.R.Fed. 205, 55 USLW 2202, 16 Envtl. L. Rep. 21,001 WAGNER SEED COMPANY (a subsidiary of Wagner Brothers Feed Corp.), Plaintiff-Appellant, v. Christopher J. DAGGETT, as Regional Administrator of the U.S. Environmental Protection Agency, Region II, and the U.S. Environmental Protection Agency, Defendants-Appellees. ocket 86-6032.
• Court: U.S. Court of Appeals — Second Circuit

Page 310

800 F.2d 310

24 ERC 1916, 87 A.L.R.Fed. 205, 55

USLW 2202,

16 Envtl. L. Rep. 21,001

WAGNER SEED COMPANY (a subsidiary of Wagner Brothers Feed Corp.), Plaintiff-Appellant, v. Christopher J. DAGGETT, as Regional Administrator of the U.S. Environmental Protection Agency, Region II and the U.S. Environmental Protection Agency, Defendants-Appellees.

No. 1164, Docket 86-6032.

United States Court of Appeals Second Circuit.

Argued April 16, 1986.

Decided Sept. 10, 1986.

Frank L. Amoroso, Garden City, N.Y. (Rivkin, Radler, Dunne & Bayh, Garden City, N.Y., of counsel), for plaintiff-appellant.

Janice Siegel, Asst. U.S. Atty., Brooklyn, N.Y. (Robert L. Begleiter, Asst. U.S. Atty., Reena Raggi, U.S. Atty., E.D.N.Y., Brooklyn, N.Y., of counsel), for defendants-appellees.

Before KAUFMAN, TIMBERS and CARDAMONE, Circuit Judges.

CARDAMONE, Circuit Judge:

This litigation began when a bolt of lightning struck appellant's warehouse on Long Island, New York. During the ensuing fire-fighting efforts toxic chemicals stored in the warehouse spilled into the surrounding neighborhood. Appellant asserts that an administrative order directing it to cleanup the toxic spill promptly placed it on the horns of a dilemma. To comply would be costly without the possibility of reimbursement from another responsible party; to refuse to comply would subject it to heavy fines. Because appellant believes that the lightning as an act of God provides it with a complete defense to the administrative order, it commenced the instant litigation and, having obtained no relief in the district court, brought this appeal asking us to review that defense de novo and issue an injunction staying the order. Doubtless appellant thinks itself caught between the devil and the deep blue sea, but as the following analysis will demonstrate, such is not the case.

Appellant, Wagner Seed Co. (Wagner), appeals from an order of the United States District Court for the Eastern District of New York (Bramwell, J.) that denied its motion for a preliminary injunction sought against appellees, Christopher J. Daggett, as Regional Administrator of the United States Environmental Protection Agency, Region II, and the United States Environmental Protection Agency (EPA). The district court concluded that it lacked subject matter jurisdiction over appellant's claim that challenged on the merits an administrative order issued by the EPA. The district court also rejected appellant's constitutional claims, holding that the fine and penalty provisions of the Comprehensive Environmental Response, Compensation,

and Liability Act, 42 U.S.C. Sec. 9601 et seq. (CERCLA), under which provisions the EPA administrative order was issued, comports with due process. This appeal requires us to review these holdings and to rule, in addition, on appellant's request that a preliminary injunction be issued by this Court.

I FACTS

Wagner distributes animal feed and agricultural chemicals to nurseries and municipalities. Its inventory is stored in a warehouse in Farmingdale, New York. The agricultural chemicals are kept apart from the other goods since many of them pose threats to human health. Some are neurotoxic, possibly carcinogenic, or both.

This segregation policy became a crucial factor in the instant case when on June 1, 1985, Wagner's warehouse was destroyed by fire. According to eyewitness reports, the fire was caused by a lightning bolt that struck appellant's building. The firefighting effort took two different approaches--the section where the toxic chemicals were stored was allowed to burn completely, while in the other areas water was used to fight the flames. The decision to allow the complete combustion of the chemicals was made upon the advice of an expert who believed that this would minimize the extent of the chemicals' spread through runoff water. Despite the firefighting efforts, Wagner's warehouse was totally destroyed and chemicals were carried to surrounding properties by the runoff water.

A cleanup operation under the supervision of the New York State Department of Environmental Conservation (DEC) was immediately commenced by Wagner and several remedial actions were also taken in the ensuing months including draining the catchbasins and removing contaminated debris. Wagner spent several hundred thousand dollars to effectuate this cleanup effort. How effective it was is disputed by the parties. Wagner claims that it cleaned up all the neighboring properties except two where it was denied access, and that it asked the DEC and later the EPA to help it gain entrance to them, but that neither agency was able to help.

The EPA paints a different picture. It became involved at the request of DEC on November 8, 1985--over five months after the fire and chemical spill. In its administrative order, the EPA stated that a potentially dangerous situation existed because properties located in populated areas were still polluted, the contamination sites were unprotected, and the onset of winter threatened to produce conditions that would exacerbate the damage. There was also a possibility that the contamination would leach into the area's groundwater. Although several meetings were held between the EPA and Wagner, progress satisfactory to the EPA was not achieved. On December 31, 1985 it issued an order which required Wagner to undertake certain prompt remedial actions and further required Wagner to develop a "Work Plan" and "Site Operations Plan" leading to complete elimination of contamination.

The EPA issued its order pursuant to CERCLA, 42 U.S.C. Sec. 9606(a), which permits such orders upon a finding "that there may be an imminent and substantial endangerment to the public health or welfare or the environment because of an actual or threatened release of a hazardous substance...." The order provided for daily fines of $5,000 for noncompliance, id. Sec. 9606(b), and threatened to seek treble damages if the government had to expend its own resources to clean up the site. Id. Sec. 9607(c)(3).

Wagner claims that an injunction must issue based on its three challenges. It argues, first, that the district court had subject matter jurisdiction to entertain its challenge to the validity of the EPA order. If the court had exercised jurisdiction, appellant continues, then it would have found that Wagner was excused from having to undertake the proposed chemical cleanup because it could successfully assert the defense that the spill arose from "an act of God." 42 U.S.C. Sec. 9607(b)(1). Wagner next raises two constitutional claims: that the amount that it would be required to

spend to comply with the order represents a taking without due process; and, that the threat of fines and penalties embodied in Sec. 9606(b) and Sec. 9607(c)(3) so penalize appellant for attempting to seek judicial review as to violate Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908). We turn first to the proper standard of appellate review and then examine appellant's arguments.

II STANDARD OF REVIEW

A party who seeks a preliminary injunction must show that it will suffer irreparable harm if the injunction is not granted. Coca-Cola Co. v. Tropicana Products, Inc., 690 F.2d 312, 314 (2d Cir.1982). Beyond this it is also required to prove "either (1) a likelihood of success on the merits of its case or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in its favor." Id. at 314-15. Whether the requisite showing has been made is a task properly left to the discretion of the trial court. Id. at 315. Our role then is to determine whether there has been an abuse of that discretion or if the result reached is at odds with a rule of equity. Id.

Wagner was required to show that absent an injunction it would have suffered non-compensable harm, and that this harm arose from the constitutional violations--which if litigated--would either be successful or at least be substantial challenges to the statute's validity. As to its non-constitutional challenge, Wagner would first have to demonstrate that the district court has jurisdiction to entertain its claim, and then it would have to satisfy the requirements of the preliminary injunction standard.

The district court held that it had no jurisdiction to hear claims challenging EPA orders on their merits unless the EPA had initiated an enforcement action under 42 U.S.C. Sec. 9604(a). With regard to the constitutional claims, it found Wagner suffered no irreparable harm and therefore held Wagner's claims to be meritless. We turn to appellant's contention that the district court had jurisdiction to entertain a challenge to an EPA order on the merits prior to the initiation of an enforcement action.

III PRE-ENFORCEMENT JUDICIAL REVIEW

A presumption exists in favor of jurisdiction by federal courts over the actions of federal administrative agencies. Block v. Community Nutrition Inst., 467 U.S. 340, 104 S.Ct. 2450, 2456, 81 L.Ed.2d 270 (1984). But, "[t]his presumption, like all presumptions used in interpreting statutes, may be overcome by specific language or specific legislative history that is a reliable indicator of congressional intent." Id.

It is helpful to examine how CERCLA enforcement actions are prosecuted. These actions are commenced by the EPA for the purpose of obtaining requested relief from a polluting party. The actions may take two forms. Under 42 U.S.C. Sec. 9606(a) when confronted with an environmental disaster, the EPA may "secure such relief as may be necessary to abate such danger or threat, and the district court ... shall have jurisdiction to grant such relief as the public interest and the equities of the case may require." Jurisdiction therefore is expressly conferred on a district court in those instances where the EPA is the moving party. Alternatively, the EPA can itself clean up a spill and then bring an action against the...